HMRC is hitting lower-paid self employed workers such as White Van Man with hefty fines for late tax returns — even when they earn too little to pay it.
Around 400,000 people on less than £13,000 were wrongly chased and received a minimum £100 penalty for not filing a tax return on time.
HMRC is hitting lower-paid self employed workers with hefty fines for late tax returnsGetty Images – Getty
After three months past the deadline, fines start increasing by £10 every day and additional £300 penalties can be applied meaning bills can hit over £1,000.
Tax experts say these penalties are causing huge distress, particularly when they owe nothing in the first place.
Dan Neidle at Tax Policy Associates said: “It’s just wrong that people with no tax to pay end up paying hundreds or even thousands of pounds in penalties. It’s an unfair law and the government should change it.
“HMRC collects about £100million in late payment penalties from people.
“That’s five times as much as it collects from people being ‘careless’ and twelve times as much as it collects from people who intentionally failed to pay tax.”
One individual said she had received penalty letters since 2020 but had stopped working in 2019 while receiving cancer treatment.
Another said “My mother, with no tax to pay, was fined for late filing despite providing evidence that she’d had two unplanned operations in quick succession”.
Despite the distress caused to low income families, HMRC has been accused of being soft on billions in VAT fraud.
MPs have also criticised the taxman for failing to collect £42billion of unpaid tax from those who have deliberately avoided it.